Hopes for a major LNG industry in B.C. dimmed by climate plan

B.C. Environment Minister George Heyman is completing a new climate action plan that accounts for massive new greenhouse gas emissions for the first phase of the LNG Canada project, but dims the prospects for a major industry to blossom on Canada’s West Coast.

A final investment decision for the $40-billion LNG Canada project was announced in October. The green light is the result of years of effort by the province to secure this new industry for liquefied natural gas, including an array of tax breaks, tariff relief and infrastructure funding. The decision ignited hopes that the province could create a niche as a provider for global climate solutions.

But the project also creates a significant challenge to British Columbia’s climate-change goals and comes as the government is trying to revive B.C.'s lagging climate agenda. The province had to abandon legislated targets over the past decade for reducing carbon emissions by the year 2020.

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The first phase of LNG Canada will be responsible for roughly 9 per cent of the total emissions allowed for the province in 2030. A planned second phase has not yet been approved.

In making room for LNG Canada, the hurdles for the dozen or more such projects still on the books in B.C. have become higher. To clear them, any subsequent LNG plant, government officials have indicated, would likely have to rely on emerging electric-drive technology. That method uses less-polluting electricity to power the liquefaction plants rather than natural gas. The new technology is not in wide use.

“Having one big and one small project may be all that the NDP can get away with, and after that, they’ll erect barriers,” said economist Philip Cross, a senior fellow at Resource Works, a research group that has received some of its funding from the Business Council of British Columbia.

Electric-drive won’t be feasible in many cases today, he said, but added “it’s very difficult to anticipate decades ahead of time what new technologies are going to look like.”

It’s a long way from the vision touted by former premier Christy Clark of at least five LNG plants that were to generate a trillion-dollar Prosperity Fund.

The NDP government has set legislated targets for 2030. To meet them, Mr. Heyman’s climate plan, expected to be released in early December, will require steep reductions in GHG emissions by consumers and businesses to accommodate the increase in emissions from LNG Canada.

The new targets for 2030 require provincial GHG emissions to come down by 40 per cent from 2007 levels.

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That means that for the LNG projects still in the works in B.C. − including a planned second phase for LNG Canada − the chances of building another project like LNG Canada’s Kitimat facility are slim.

LNG Canada intends to use traditional, gas-fired turbine drivers for the energy-intensive process of transforming gas to liquid. From wellhead to the terminal, the project will generate 3.45 million tonnes of carbon-dioxide equivalent annually, and more than half of that will be generated by the gas turbines.

Energy Minister Michelle Mungall said prospective LNG investors have been told that any new projects will have to fit within the province’s climate action targets.

“One of the things they are looking at as a result, is would their industry be able to fit in those targets for example if they were 100-per-cent electrified,” she said in an interview.

In a briefing in October with senior B.C. government officials, adopting electric-drive technology was described as a minimum requirement for consideration of any new LNG projects.

“It will be table stakes for any new plant in the LNG system,” an official said. “There is going to have to be a whole lot of electrification.”

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One small-scale B.C. proposal, Woodfibre LNG near Squamish, is considered by industry experts to be viable in the short term. Woodfibre forecasts that its terminal operations could emit 121,800 tonnes of GHGs per year.

That is the only other project identified by government officials as fitting into the climate action plan at this point.

Green Party Leader Andrew Weaver said Mr. Heyman cannot say “yes” to any additional LNG without undermining his climate plan.

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